US ethanol consumption to rise 1% in 2019: EIA
US ethanol consumption will rise 1% next year, resulting in an estimated ethanol blend percentage of gasoline that increases to about 10.3% by 2019, the US Energy Information Agency (EIA) estimated in a research note this week.
"Continued growth in ethanol production and limited export growth through 2019 will lead to increases in domestic consumption of ethanol by way of limited higher-level ethanol blend growth beyond E10," said the report, which comes as the corn lobby is fiercely resisting pressure from refiners to revise the country's Renewable Fuel Standard.
A blend percentage of 10.3% by 2019 would be marginally higher than the 10.1% seen in 2017 and could support production margins that averaged $0.22 at per gallon at US corn ethanol plants in 2017.
This is the fifth consecutive year that margins have averaged more than 20 cents/gal, helping to drive consistent ethanol production growth over the period, the EIA said.
Meanwhile US ethanol production averaged an estimated 1,032,000 barrels per day (b/d) in 2017, marking a fifth consecutive record level of annual production.
Despite record-high domestic gasoline demand and record-high ethanol exports in 2017, ethanol production exceeded consumption last year, which led to end-of-2017 inventories that were 4 million barrels higher than at the end of 2016, the EIA said.
It added that in December 2017, fuel ethanol production set a four-week record high, averaging 1.09 million b/d, while ethanol blending into gasoline, measured by net inputs, was nearly unchanged from the previous year.
The agency said increases in ethanol supply had outpaced increases in domestic demand in 2017, contributing to relatively low spot prices and margins that are about 20 cents/gal lower than the previous four-year average.
Production of US corn has been at record high levels in recent years, keeping corn prices (the main variable cost in ethanol production) generally stable, ranging between $3.40 and $4.00 per bushel since 2015.
A drought in 2012 and 2013 prompted corn prices to spike to around $8.00 per bushel, resulting in one of the least profitable periods for ethanol operators in the US.